The Winner of the Iran Oil Crisis Isn't Russia, It's Algeria
As Gulf energy markets convulse, a quiet North African giant is cashing in on geography and a $60 billion bet on its own future
KEY QUESTIONS
WHAT HAPPENED? US and Israeli strikes on Iran on February 28 have sent crude prices to their highest since 2022 and shuttered the Strait of Hormuz
WHY IT MATTERS? With Gulf energy under strain, Algeria’s direct Mediterranean pipelines, major investment plans, and growing share of EU gas imports position it as an unlikely but compelling winner of the crisis
WHAT’S NEXT? How much Algeria can capitalize depends on how quickly it can expand capacity and how long elevated prices hold
Oil prices continue to dominate the headlines as the war in the Middle East enters its third week. The US and Israeli strikes on Iran on February 28 sent energy markets into turmoil: Crude is hovering close to $100 per barrel, the highest since 2022, while roughly 110 bcm per year of LNG transiting the Strait of Hormuz has been disrupted. The end result is shaping up to be one of the largest supply shocks in modern energy history.
Commentators are pointing to Russia as the real victor of the crisis, with the world seeing a quiet rapprochement to Russian supplies despite heavy sanctions. The US has recently announced a 30-day waiver on Russian energy products, an exemption allies like Japan are reportedly reviewing.
Yet it would be a mistake to conclude that only great powers benefit from this turmoil. At the tip of North Africa, Algeria finds itself in a rare position of leverage.
The Stability Dividend
While the Gulf comes under fire, Algeria’s pipelines run quietly under the Mediterranean. The North African region has built a reputation for stability amid political shocks elsewhere, and that geography is suddenly worth a great deal.
Algeria is Africa’s third-largest holder of oil reserves. In 2024, it exported 39.2 bcm of gas to the EU–roughly 14–15% of the bloc’s total imports–making it Europe’s fourth-largest supplier behind Norway, Russia and the US, according S&P Global. Its export routes, the TransMed pipeline to Italy and Medgaz to Spain, are direct and immediately available.
More capacity is coming. In February, Niger and Algeria formally relaunched the stalled Trans-Saharan Gas Pipeline, a $13 billion, 4,128 km project that will transport gas from Nigeria through Niger to Algeria’s Hassi R’Mel hub. With a projected capacity of 30 bcm per year, roughly 10% of Europe’s total gas demand, its timing could hardly be better.
The Europe Factor
European buyers know energy stress all too well. Before Russia’s 2022 invasion of Ukraine, Moscow supplied roughly 40% of the continent’s energy; sanctions have since strangled that supply by around 80 bcm, according to the Center on Global Energy Policy. The Gulf crisis deepens the squeeze further.
Yet a loss for one is a gain for another. Elevated prices will push Algeria’s hydrocarbon export revenues higher, having already exceeded $34 billion in the first three quarters of 2024. With Brent well above $100, OPEC+ quota constraints become less painful, meaning Algeria earns more per barrel even at capped volumes.
The crisis also accelerates what was already underway. Just days before the Gulf crisis began, the EU formally described Algeria as a “strategic and reliable” partner. Even before the conflict, Iran’s ability to supply global markets was constrained by sanctions and underinvestment; its removal from the equation tightens the market further and elevates Algiers’ standing.
Sonatrach, Algeria’s state-owned energy company, approved a five-year, $60 billion investment plan last month, with 80% directed to upstream exploration and production; approved before the crisis, the timing now looks prescient. The company also cited 17 new discoveries in 2025.
Private capital is taking notice: last July, Sonatrach and Italy’s Eni signed a 30-year, $1.35 billion deal to develop the Zemoul El Kbar block, targeting 415 million barrels of oil equivalent. Similar discussions are reportedly underway with the Netherlands according to the Algiers Brief.
The Double Edged Sword
Algeria cannot simply turn on a tap. Russia’s entrenched footprint in global energy markets makes Moscow a preferred partner for much of the world, even if Europe keeps its distance. And Algeria still imports around $50 billion in foreign goods annually, commodities that are themselves rising in price, adding inflationary pressure that offsets some of the windfall.
For now, Algeria’s greatest strategic asset may simply be where it isn’t. That geography, combined with $60 billion in planned investment, could define the country’s economic trajectory for years to come.
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